Why Rivian Shares Soared Thursday

What happened

Markets are on the rise today, but shares of Rivian Automotive (RIVN 4.17%) are vastly outperforming even the Nasdaq Composite's 5.5% surge Thursday morning. After reporting its third-quarter earnings after the market closed last night, Rivian shares soared more than 18% in early trading. As of 10:45 a.m. ET, the stock remained 14.7% above Wednesday's closing price. 

So what

Shares are still down nearly 70% year to date, but today's bounce seems to indicate investors believe it went low enough. Though Rivian's losses continue to mount, there were some positives in the report regarding demand and progress on ramping up production. 

Expand

NASDAQ: RIVN

Rivian Automotive, Inc.

Today's Change

(-4.17%) $-0.74

Current Price

$17.00

Key Data Points

Market Cap

$22B

Day's Range

$16.72 - $17.78

52wk Range

$11.57 - $22.69

Volume

18M

Avg Vol

29M

Gross Margin

-276.59%

Rivian reported a net loss of more than $1.7 billion in the third quarter, but it still held $13.8 billion in cash and equivalents on its balance sheet as of Sept. 30. The electric vehicle (EV) company believes that is enough to fund operations through 2025. It is also throttling back its capital expenditures as it works to build sales through continued supply chain challenges.

Management maintained its projection for the production of 25,000 vehicles this year. That implies it is ramping up quickly, since it will take a 45% jump in fourth-quarter production compared to the third quarter to hit that target. Also important is that Rivian says demand is there to absorb that growth. 

Now what

Demand for Rivian's R1T pickup truck and R1S SUV continues to grow. Investors might also be jumping into the stock today because that demand growth is in contrast to what fellow EV start-up Lucid Group told investors yesterday about its backlog. Rivian's pre-orders, net of both cancellations and deliveries, continue to march higher, however. 

Data source: Rivian Automotive. Chart by author.

While losses continue to mount, the recent report indicates an inflection point in production growth. With funding in place to grow operations for two more years, investors seem to believe that the stock has fallen enough to bet on a path toward profitability over the next several years.